Semiconductor stocks performed extremely well in 2020, and analysts are expecting more great things in the space in 2021. Simply put, the tech sector continues to thrive because it owes its massive success in no small part to the semiconductor industry. Although most top semiconductor stocks fell along with the broader market during the coronavirus-induced market sell-off, they have bounced back strongly.
Consumer electronics sales are booming, and trends such as cloud computing, electric vehicles, smartphones, and online gaming have generated tremendous tailwinds for the semiconductor and semiconductor equipment market. However, the warning by Qualcomm Inc (NASDAQ: QCOM) regarding the shortage of chips is something investors should be mindful of. The global semiconductor shortage is certainly a real challenge. Cristiano Amon, head of the world’s largest mobile chipmaker, flagged shortages “across the board,” citing the industry’s reliance on just a handful of players in Asia.
With such high demand across industries, there are many reasons to be bullish on the future of the semiconductor industry. Sure, the growth of semiconductor growth may be hitting a speed bump with the shortages of chips. But as these semiconductor companies ramp up their production, things will eventually be up and running again. With all that in mind, do you have these four top semiconductor stocks to watch on your list this week?Top Semiconductor Stocks To Buy [Or Sell] Now
- Taiwan Semiconductor Manufacturing Co. (NYSE: TSM)
- NVIDIA Corp. (NASDAQ: NVDA)
- Advanced Micro Devices Inc. (NASDAQ: AMD)
- Ambarella Inc. (NASDAQ: AMBA)
First up, Taiwan Semiconductor Manufacturing (TSM) is probably one of the best performing semiconductor stocks in recent months. The company’s quick rise to global dominance caught many by surprise last year. For those who are following the development of TSM quickly, you would have realized that TSM stock gained 25.2% in January 2021. The surge came after Intel (NASDAQ: INTC) talked about outsourcing some of its Core processor production to the Taiwanese company. That’s on top of TSM’s best-ever quarterly results.Source: TD Ameritrade TOS
Now, as the global chips shortage is felt across the board. TSM is not resting its laurels and has already made plans for expansion in Japan. Reports said TSM is willing to increase the compensation for workers who are willing to work during the Lunar New Year. That certainly suggests that the company is taking serious measures in addressing the chip shortage issue. Despite many headwinds, the company has managed to strike a deal with Apple (NASDAQ: AAPL) to develop ultra-advanced display technology at their secretive facility in Taiwan. Considering the company’s leading position in the industry, do you think the best is yet to come for TSM stock?
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Coming up next we have gaming chip titan NVIDIA. For non-gamers, NVIDIA is a multinational tech company that designs graphics processing units (GPUs) and systems on a chip (SoCs). Its GPUs are often used in the fields of gaming and cryptocurrency mining. Considering that demands in both these sectors are high now, it’s not surprising why NVDA stock has been trading higher this week. For instance, NVIDIA’s RTX 30 laptop is in high demand for cryptocurrency mining amid Bitcoin’s surge. With the company expecting to report earnings on February 24 after market closes, investors are on the edges of their seats.Source: TD Ameritrade TOS
Another area that is really interesting in the long term could be its investment in autonomous vehicle applications. From its partnership with Nio (NYSE: NIO), many are very optimistic about the company’s potential in the autonomous vehicles space in the long run. Nio has selected NVIDIA’s DRIVE Orin SoC for its upcoming line of EVs which will come with advanced automated driving capabilities. NVIDIA CEO Jensen Huang commented, “We are delighted to partner with NIO, a leader in the new energy vehicle revolution—leveraging the power of AI to create the software-defined EV fleets of the future.” With all that being said, is NVDA stock on your list of best stocks to buy ahead of its earnings?Advanced Micro Devices Inc.
With semiconductors in high demand, another company that posted strong growth is Advanced Micro Devices. The company surprised Wall Street in late January with its fourth-quarter results, reporting smashing revenue growth and earnings year-over-year. From its latest quarterly result, the chipmaker’s revenue crossed the $3 billion mark for the first time.Source: TD Ameritrade TOS
Also, the company announced the full portfolio of AMD Ryzen 5000 Series Mobile Processors. These bring AMD’s highly efficient and extremely powerful core architecture to the laptop market. This play by the company is certainly well-timed as laptops become an even more essential part of how we work and connect today. The surge in full-year revenue and profits could also be due to strong demand for the company’s products. That’s particularly from cloud giants like Microsoft and Google (NASDAQ: GOOGL). With such exciting developments surrounding the company, will you consider adding AMD stock to your portfolio?Ambarella Inc.
Lastly, video chip developer Ambarella is another semiconductor stock worth including on your watchlist. There is some reason for optimism as the company strengthens its position in the artificial intelligence (AI) space. AMBA stock may have appeared on your radar in recent weeks when Berenberg reiterated its “buy” rating on the stock. Analyst Andy Buscaglia raised his valuation estimate from $87 to $160.Source: TD Ameritrade TOS
What’s more, Ambarella’s transition into the computer vision (CV) space has certainly driven optimism in investors. This refers to the company’s imaging solutions that make cameras smarter by extracting data from video streams. The company is making swift progress in this space. “We think investors are just starting to understand the role CV will play in industrial automation, and many do not yet realize how well AMBA is positioned to benefit,” the analyst wrote in a research note to investors. “We would be buyers ahead of sales accelerating and potential design wins over the next twelve months.” With all this in mind, would you say that AMBA stock deserves more attention?